BSkyB was in demand as speculation ran round the market that Rupert Murdoch's News Corporation wanted to take the satellite broadcaster private.

News Corporation owns just over 39% of BSkyB and analysts said it would cost around £9bn - including debt - to buy the rest of the business at the rumoured price of 735p a share.

Neither company would comment on what was termed "talk in the marketplace", and many traders dismissed the tale as "a bit of Friday fun." However BSkyB's shares ended 28.5p higher at 598p with 21m shares traded, substantially above the recent daily average of around 4m. The 5% rise made the company the biggest riser in the leading index. Analyst Paul Richards at Numis said the story was plausible:

Sky has invested very heavily over the last few years, in broadband and high definition. It is just on the verge of starting to benefit from this. There should be a material increase in profits over the next two years, but the market is not convinced of this so the shares have been held back.

In terms of timing it would make sense to do it now, if News Corp wanted to do it. The question is, do they? It would cost around £7.5bn - or £9bn including debt - but it could have earnings of £1.5bn-£2bn in a couple of years. So you can certainly see the attraction. Another thing to bear in mind is that News Corp would be using dollars to bid, so given the weakness of the pound you could see why it would stack up.

However we have heard stories like this before in the past, when Sky's shares were weak or when credit was readily available.

In fact BSkyB was one of a number of companies subject to takeover gossip, a trend which dealers said was an unmistakable sign of a bull market.

Among the mid-caps Game Group gained 3.05p to 88.95p on talk of interest from US rival GameStop, while Bovis Homes, 12.8p better at 405.5p, was the day's supposed target for rival housebuilder Persimmon, up 8p at 444.7p. Just a day earlier Barratt Developments, 2.4p higher at 126.9p, was said to be in Persimmon's sights.

Software group Aveva added 33p to £11.50 as Goldman Sachs issued a buy note, in which among other things it said the company could be appealing to a possible predator. The bank said Aveva could command a price of anywhere between £12.58 and £27.02 a share, based on previous takeovers in the sector. Goldman said:

We reiterate our conviction buy on Aveva shares and continue to view the company as a structural winner in the European software sector due to its exposure to key global growth themes of high exposure to infrastructure build in the fast growing emerging markets, increasing share of offshore versus onshore development in the oil and gas industry and renewed investments in nuclear power both in the developed and emerging world. The stock trades at a significant discount (20%-40%) to its peer group despite better expected top-line growth, operating margins and cash returns and hence we believe it is undervalued at current levels.

In our view, Aveva is a premier strategic asset in the software sector that could appeal to a potential acquirer.

It named a list of possible buyers, including Dassault Systemes, Autodesk, SAP, Oracle and IBM, or even industrial players such as Areva and Siemens.

Overall the FTSE 100 finished 8.39 points higher at 5625.65, but it came off its best levels as disappointing US consumer confidence figures outweighed better than expected American high street sales. Nick Serff, market analyst at City Index, said:

The markets have had a very choppy day with some quite sharp moves after US retail sales figures and Michigan consumer sentiment both managed to delight and alarm all in the space of 90 minutes. The sharp equity moves as a result emphasises how sensitive investors are to economic data right now.

Banks were among the leading risers, after investors warmed to their US peers on hopes that President Obama's plans to restructure the sector would be watered down. Royal Bank of Scotland rose 2.02p to 42.57p, while Lloyds Banking Group ended 1.93p higher at 58.47p and Barclays was 8.1p better at 351.85p.

But HSBC fell 10.6p to 684p following news of a data theft at its Swiss private bank affecting 24,000 clients. As a result Fitch placed the Swiss bank on a negative rating watch. The ratings agency said the move reflected the problem was "a serious operational incident which could potentially have reputational repercussions for HSBC's private banking franchise."

Insurer Resolution was the biggest faller in the FTSE 100, down 1.15p to 72.45p. The company learnt this week that it was losing its place in the leading index, to be replaced by specialist banking group Investec, steady at 530p.

British Gas-owner Centrica closed 1p better at 290p after it held an investment day for institutions and analysts.